The Free Application for Federal Student Aid, otherwise known as “FAFSA” has long been a dreaded name always on the radar of any student looking towards college following high school graduation. It has always been considered a necessary evil, something you and your parents have to complete in order to even be considered for financial aid, and for years, the process has remained unchanged. All of this is about to change due to a new policy, announced by President Barack Obama in September 2016. It is important you understand what these changes are if you are a college student or parent of a college student. These changes affect the oncoming 2017/2018 school year and begin as early as October 1, 2016.
- Application is now available October 1st.
In previous years, the FAFSA application was not available until after the first of the year. The problem with the January 1 application availability was most parents did not have their W2’s for the tax year being requested. Employers are not legally obligated to send out W2’s before January 31, thereby delaying when income figures would be readily accessible. However, given the competitive nature of financial aid, students were encouraged to submit their applications as soon as the form becomes available. This push caused many to simply estimate their yearly income when submitting the application. Once final income numbers were known, applications could be amended or corrected, but that added an extra step to the process and was easily forgotten, leading to inaccurate income figures.
- Older tax data will be accepted.
The adjusted application release date takes into account this issue experienced by parents submitting their income information for financial aid consideration. Because of the quick turnaround from the time the application was available and the importance of getting it submitted as soon as possible, parents were stuck with estimating what they predicted would be their yearly gross income. Those figures could be supplemented through corrections later on; however, future or predicted income data was what was being submitted.
- Earlier date means quicker acceptance.
The new date allows families to start the process earlier, utilizing the income data from the previous tax year. Students Having this information means parents will be relying on actual income figures and not on estimates. The hope is this better information will reduce inaccuracies and the later need for verification. The educational institutions who receive the figures will give them more time to review documents and potentially send out award letters earlier in the application cycle. If a student knows he or she will be receiving aid earlier on in the process, he or she may be more likely to submit an application for admittance to a school.
- Asset protection will decrease.
Previously, when parents reported their finances on the FAFSA form, a portion of their assets were considered “protected” and were not counted by the federal government toward the portion of money they were expected to contribute toward their child’s education. Under law, when applying for financial aid, the government does take into account the parents’ incomes in calculating what is deemed to be the “parent’s share” of college costs. That income figure left out assets such as certain savings and investment funds. By not having to include that information, the child’s chances of receiving a higher federal financial aid award increased. That protection changes this year. The new changes implemented will decrease the assets parents can consider “protected” when reporting income.
Your protected assets depend on a number of factors, including age, marital status of the parents, and number of siblings in the home. The cut in what is protected and what is estimated to be a few hundred dollars from one year to the next. The concern with this change is the effect it will have on middle-income families who are often on the border of qualifying for financial aid. This change may be enough to tip them over to the ineligibility column this coming year.
- Do not let income deter you from applying.
Do not let these new changes to the system derail you from filling out a FAFSA. Many students have the misconception that their parents make too much money so they will not qualify. However, you will never know if you do not try. The worst that could happen from you filling out a FAFSA form and not qualifying for aid is you simply do not qualify and will need to seek other avenues to pay for college. However, by not filling out and submitting a FAFSA form, you are effectively closing out any possibility you could have in receiving assistance.
Most financial aid in the United States is given through universities, rather than through the government. Schools will not issue financial assistance, both need-based and merit-based, however, if the student does not have a FAFSA on file. Many schools award merit-based aid not on income figures but on factors such as grade, standardized test scores or other achievements. Even if your parents make too much income, by having that FAFSA on file, you can still seek merit-based assistance through your school. Not applying effectively closes that door.
- Schools will no longer see their competition.
In years past, when a student filed his or her FAFSA, that student would choose up to 10 colleges who would receive that student’s financial details automatically. When doing this, the other colleges on the mailing list could scope out their “competition” or other schools on the students’ lists. With the new changes being implemented, colleges will no longer be able to see a list of what other schools were being considered by each student.
This change is good for students. Experts in the past have stated that universities used these lists as factors in making financial aid decisions. It does not seem fair, but for years, it was suspected that schools would see where they ranked on a potential student’s “list” and would use that ranking as an indication of whether the student would be more likely to attend their institution regardless of financial assistance. If Penn State was your dream school from the start, even though you could potentially not afford tuition, putting that school at the top of your list could be viewed by representatives at Penn State that you would attend that school even if they turned you down for aid.
Whether or not this suspicion is true, schools will no longer have the ability to see who their competition is for each student. However, keep in mind this only applies for federal financial aid. The list will still be visible to state agencies. Therefore, experts still recommend putting a state educational institution at the top of your list to maximize chances that you will be considered for financial aid at that state university.
To find out more information about the FAFSA process and federal student aid, visit: StudentAid.gov